Many fooled by credit fee schemes Consumers pay up to $200 for lists available for free.

Some telemarketing companies have been hitting millions of consumers nationwide with schemes that promise consumers a low-interest-rate credit card for fees as high as $200. Instead of a card, subscribers get a list of banks that is available elsewhere for free or for as little as $1.50.

Mary Beth Butler of Bankcard Holders of America, a non-profit consumer group, said a five-month investigation conducted by the organization turned up a coordinated program by dozens of marketing companies nationwide. The schemes lead people to believe that they will receive a Visa or MasterCard with interest rates as low as 11.88 percent.

"I know people in the Baltimore area have been solicited," Butler said.

George Jones, head of the state's Financial Audit Services Team anti-fraud unit, said he receives calls every day from people who have gotten telemarketing pitches.

"They're hitting people in the state," he said. "They know you're credit-worthy. They usually know if you've got a Visa or MasterCard already. . . . It catches so many people off guard. They say 'Give me the number and expiration date of your MasterCard.' I think people think MasterCard is calling."

The proliferation of the marketing scheme prompted Visa International and MasterCard International yesterday to file a federal lawsuit in San Francisco aimed at putting the operators of these schemes out of business.

The suit, alleging that the telemarketing operations have bilked consumers and banks out of millions of dollars, seeks $95 million in compensatory and punitive damages based on charges of trademark infringement, fraud, unlawful business practices and violation of federal racketeering laws.

While the suit names 18 individual and corporate defendants and seeks a preliminary injunction to shut down their operations, it alleges that there are many more participants than are named.

The suit contends that the scheme is orchestrated by Listworld, a Huntsville, Ala., company controlled by Daniel Klibanoff, who it said was convicted on 25 counts of mail fraud in 1985.

"Listworld, in essence, franchises this low-interest credit card fraud scheme to other defendants and to numerous other telemarketers around the country," the suit says.

According to Listworld's 1991 catalog, its Credit Card Holders File contains the names of 102 million people with good credit ratings. The company also says it provides monthly lists of newly issued credit cards.

Ron Isaac, a staff attorney with the Federal Trade Commission's Division of Credit Practices, said the FTC was looking both at the marketing companies and the firms that supply them with the direct-mail kits.

"We know that it's a network with suppliers," he said. "We're attempting to do something."

The telemarketers target potential customers through mailing lists of people who already have major credit cards, whom they then solicit by postcards.

A typical postcard, for example, reads: "I am pleased to notify you that, due to your excellent credit history, you are eligible to receive [the card shows MasterCard and Visa logos] with an annual interest rate as low as 11.88 percent, THE LOWEST INTEREST RATE IN THE NATION!!!!

"I am authorized to hold this rate offering for only 48 hours from receipt of this notice, so call me immediately."

The card then lists an 800 phone number.

Consumers who call are first screened to see if they indeed did get one of the postcards, and then are "pitched" by a salesperson, who works from a prepared script.

Consumers are often led to believe they will receive a MasterCard or Visa with an 11.88 percent interest rate, and are PTC given the impression that the telemarketing company works closely with the banks involved or the credit card companies themselves.

Consumers receive various packages, depending on the firm involved. Despite the clear implication, or in some cases out-and-out promise, that a consumer is assured a low-rate card for a "one-time processing fee," what he really receives is a list of banks that he then has to deal with on his own.

In some programs, consumers also get a loose-leaf binder of financial advice information. In other cases they receive booklets on financial survival. In still others, they get just the sheet of paper with a list of banks. In some cases, unauthorized copies of bank applications for credit cards are enclosed.

Those who respond to the offer typically are billed on their existing credit cards -- often through a third party. In a more recent twist, they are finding the money debited directly from their checking accounts.

In their suit, Visa and MasterCard allege that millions of dollars of charges have been "laundered," or processed under a third party's name.

Robert McKinley, head of RAM Research, a credit card tracking service based in Frederick, said the 11.88 percent rate appearing on the postcards is available nationally only from Arkansas Federal Savings Bank in Little Rock. (That rate is now outdated -- it has fallen to 11 percent.)